CHICAGO — Parents try all kinds of tricks to steer children toward healthful and productive habits. When all else fails, they beg or bribe them.

Companies aren”t much different.

Years ago, they looked after workers by offering them straightforward guarantees. In exchange for long and loyal service and an orderly march toward retirement, workers got lifetime pension payments and medical care.

These days, most of the financial burden and risk of health care and retirement planning fall on workers, but employers embrace a new kind of paternalism.

Instead of promising lifetime benefits, they beg, bribe and sometimes even trick workers into taking better care of themselves.

“There”s ambivalence about putting people on their own,” said Edward Lawler, director of the Center for Effective Organizations at the University of Southern California”s Marshall School for Business. “There”s a feeling, maybe people won”t make the right choices. We should make them take a proactive step.”

Among the latest examples is a pilot program by Fidelity Investments that automatically signs up workers 50 and older to contribute as much as $20,500 annually of their pre-tax paychecks to 401(k) retirement savings plans.

Employees can opt out, but studies show that most don”t. Inattention, inertia or gratitude that someone finally is helping them save prompts most workers to stick with the program.

Such programs help companies manage their work forces and control costs, much like popular corporate wellness programs that offer insurance discounts and cash to employees who adopt healthier habits.

Wellness programs take aim at spiraling health-plan bills. Auto-enrollment attacks another thorny issue: How will companies edge older employees out the door if they can”t afford to quit working?

“Everybody pretty much left on the clock” in the days when most big companies provided pensions, said Steven Sass, associate research director at Boston College”s Center for Retirement Research. “The employer could plan succession, and retirement was not a great trauma for the worker.

“Today, there are no financial incentives to retire at a certain date. There”s increasingly no cultural norm. What had been a very well-organized, efficient and fairly impersonal process is filled with emotion and anxiety for both sides,” he said.

Workers are not sure whether they have saved enough to retire, and employers can”t be sure when they will leave, he added. Making certain they save and invest wisely is one step that, at the very least, provides options.

Boston College”s retirement research center estimates 43 percent of U.S. households risk not being able to maintain their standard of living in retirement, even if breadwinners stay on the job until age 65 and withdraw the equity in their homes using reverse mortgages.

Only about 10 percent contribute the maximum, according to the center”s research.

Increasingly, employers are steering workers toward saving for retirement by automatically enrolling them in 401(k) programs. They are also stepping up their contributions annually and steering their money into age-appropriate investments.

Among the obvious beneficiaries are financial concerns that collect fees for managing the more than $2 trillion invested in 401(k) plans.

Auto-enrollment is gathering steam since Congress passed a pension reform bill last year that lifted legal uncertainties and paved the way for new Labor Department regulations.

Fifty-eight percent of employers will automatically enroll workers into 401(k) plans by the end of the year, and about one-third already combine, or plan to combine, auto enrollment with auto-escalation features that step up contributions annually, according to a recent survey by Lincolnshire-based Hewitt Associates.

Fidelity”s new program, which focuses on workers closest to retirement, is among the latest experiments.

Employers automatically sign up workers 50 and older to take advantage of a federal “catch-up” provision that allows them to contribute as much as $5,000 above the annual maximum, which is $15,500 in 2007.

Left on their own, fewer than 10 percent of employees choose the catch-up option.

Fifty employers decided to give it a try. Fidelity declines to name them but said they run the gamut from big to small, for-profit to nonprofit, in a variety of industries.

The early response is positive, said Jamie Cornell, Fidelity senior vice president for employer marketing.

Employers” biggest concerns are how employees will react and whether the program will drive up the cost of matching contributions.

“We strongly encourage clients to experiment and see what the feedback is,” Cornell said. “So far, we”re hearing (employees say), ”I need to be moved along to save more because I”m not going to be doing it myself.””

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(c) 2007, Chicago Tribune.

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